The Greek debt crisis could be the final nail in the Liberal Democrat coffin

I've just been speaking to an influential financial journalist who, this time on Monday afternoon, was considering voting for the Liberal Democrats. But he's since changed his mind. And his reasoning can be summed up in one word: Greece.

He explained to me:

In the last 48 hours, the argument – put forward by Labour and the Liberal Democrats – that swift deficit reduction would send Britain back into recession has been totally upended. Voters might fall for that one, but the bond markets simply won't.

The Greek 10-year bond yield passed 10 per cent this morning [see Figure 1 above] – and bond yields from Portugal and Spain suggest the problem could be contagious, as the markets hunt for economies overburdened with debt.

The Euro has fallen to its lowest level against the dollar in a year, global stock markets have tumbled, and there is a genuine fear among investors that the debt crisis could spread.

There is only one way for the UK to avoid a Greek-style crisis, and that is to reduce the country's deficit as quickly as possible. The Tories' economic plans have been vindicated.

There you have it, then: Lib-Lab plans to nurture the economy slowly back to health are provably wrong-headed. As Benedict Brogan noted earlier, the violent riots in Athens are a telling backdrop for the last day of this election campaign. Let's hope they are not a sign of things to come.